The Government’s economic policies of attracting new investment as well as enabling re-investment among existing companies are the reasons Zambia’s economy is set to continue expanding, an economist has said.
Chibamba Kanyama said as a result of these policies, more investors would want to come into the country, while those in existence would re-invest to expand their organisations.
Speaking in an interview in Lusaka, Mr Kanyama said the current regime was attracting high levels of investment because the Government has taken a pro-active stance of marketing the country away from the traditional Foreign Direct Investment (FDI) origination from countries in Europe to emerging nations that were experiencing astronomical growth patterns, mainly India and China.
“There has been a fine balance between attracting new investment and enabling re-investment among existing companies.
Unlike in previous years when concessions and focus by Government were towards those investing for the first time, the current Government has given equal or even deeper attention to existing investors.
This has worked very well for Government because it costs more money to attract a new investor than it does enabling an existing investor to re-invest and expand.
Whereas new investors may seek tax relief for a period up to five years, existing companies that bring in new capital will not have this tax relief,” Mr Kanyama said.
Mr Kanyama, who is also Zambia Breweries Corporate Affairs director, said that his firm had injected more than US $75 million in the past three years, saying it was much higher than what some new investors might have brought into the country.
He said that the $75 million investment would immediately result in high Government revenue in the medium to long term.“It also means, therefore, that the bird in hand is better than the one in the bush.
What this Government has done is to give a stronglistening ear to the needs of local investors and in the process enabling them to grow in the long term; this is the best strategy ofsustaining economic growth,” Mr Kanyama said.
Mr Kanyama said that there has been times that Government has taken a gamble by providing for trade-related tax relief to existing companies in the hope of recouping it in the long term. Such a measure, he said takes a highly focused and pragmatic Government to achieve.
In the case of Zambian Breweries, he said the firm had urged the Government to look broadly at the fiscal factors.
He said that traditionally, governments only want to get as much revenue from a company as possible without focusing on the bigger picture.
“Fortunately, and in a win-win approach, the Government now appears to have struck a fine balance between maximisation of revenue, while at the same time understanding our model to broaden the tax base through the value chain.
In other words, whereas we seek to pay more taxes each year, we feel the real gain for Government is to enable a company like ZB, and others following the same model, to expand,” Mr Kanyama said.He said in the brewery industry for instance, owing to Government’s policies, a number of associated companies are beingborn, such as barley farms.
He said from the creation of such associated companies, Government would still be able to earn revenue.“This should also allay accusations that multinationals want to pay as little tax as possible.
On the contrary, multinationals seek long term economic stability and growth through value-chain expansion,” Mr Kanyama said.
Mr Kanyama, therefore, urged the Government to remain focused on the path it has taken as the country’s future remains brighter for economic growth, wealth for households through employment and further attraction of new investment.
[Times of Zambia]